Genesis posts 'solid' profit

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Power company Genesis Energy says it could be ready for a sharemarket float within four to five months of getting the green light from the Government.

Genesis yesterday posted a steady operating profit, up $6 million to $196m for the six months to the end of December, even though revenues fell 7 per cent.

The company said its profit was "solid", during a time of increased competition for customers and when one of its big power stations, Huntly's gas-fired plant, unit 5, was out of action for 38 days for a planned refurbishment. The 400- megawatt plant is now back in action.

It is aiming to deliver consistent profits and dividends, year-to- year, no matter what the weather, with a more balanced mix of power stations, including hydro and gas-fired plants.

Genesis yesterday announced it was paying the Government a $57m dividend for the half year. It expected to double that payout for the June full year to $114m.

On assets worth about $2 billion, the gross dividend yield would be equal to about 7.8 per cent and a net yield of 5.5 per cent.

Genesis had not paid a dividend for two years while it absorbed the costs of buying the Tekapo A and B power stations in the South Island.

Despite a dive in wholesale electricity market prices and a 5 per cent fall in its own generation, Genesis still managed to lift operating profits 3 per cent to $196m.

Chairwoman Dame Jenny Shipley said the half-year result was a "very strong one" .

"We are extremely well prepared as a board and senior executive team to deliver an IPO [initial public offering] in a very timely fashion if they [the government] want to do that," she said.

Though fellow state-owned Mighty River Power is expected to be part-sold by the Government by the middle of the year, Genesis said it could be ready to float within "four or five months from go, to delivery" she said.

Genesis chief executive Albert Brantley said: "We may not be listed yet, but . . . we run our company as though we are listed."

Meanwhile, given high storage levels in South Island hydro power lakes and flat demand, Genesis expected lower wholesale electricity prices to continue in the near term.

Despite wholesale prices down 19 per cent in the December half year, Genesis put through "modest" price rises for retail customers in Wellington, Auckland and Christchurch during the half year.

That was partly because of higher energy charges, but mainly reflecting the pass-through of higher transmission costs from grid company Transpower and lines companies. Fairfax NZ